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MARULENG LOCAL MUNICIPALITY (Registration number LIM 335) FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 MARULENG LOCAL MUNICIPALITY (Registration number LIM 335) Financial Statements for the year ended 30 June 2020 General Information Nature of business and principal activities South African Grade 3 Municipality (Local Municipality) as defined by the Municipal Structures Act. (Act no 117 of 1998) within the Mopani District Municipal Area of Jurisdiction Mayor Cllr HM Thobejane Chief Whip Cllr ML Mongadi Speaker Cllr MJ Mahlo Councillors Cllr MJ Rakgoale (Exco Member) Cllr NV Lewele (Exco Member) Cllr MR Maakamela (Exco Member) Cllr PE Shai (Exco Member) Cllr B Mohlabe Cllr DM Sebela Cllr EC Du Preez Cllr JT Morema Cllr LV Shaai Cllr MA Mathaba Cllr MD Popela Cllr MF Madike Cllr MJ Modiba Cllr MM Komane Cllr MO Mathipa Cllr MR Malepe Cllr MS Kgohloane Cllr MT Mongadi Cllr SC Shokane Cllr SF Mahlo Cllr SL Mkansi Cllr SV Mametja Cllr TD Mogale Accounting Officer Mr TG Magabane Registered office Maruleng Municipal Offices 65 Springbok Street Hoedspruit Business address 65 Springbok Street Hoedspruit 1380 1 MARULENG LOCAL MUNICIPALITY (Registration number LIM 335) Financial Statements for the year ended 30 June 2020 General Information Postal address PO Box 627 Hoedspruit Telephone Number 015-793 2409 Fax Number 015-793 2341 Email Address [email protected] Website www.maruleng.gov.za Investec Bank Auditors Audited by: Auditor-General of SA (AGSA) Audit Committee members Mr L Lankalibalela (Chairperson) Mr K Mosupa Ms R Ramutsheli Mr T Nonyane Ms J Mabuza 2 MARULENG LOCAL MUNICIPALITY (Registration number LIM 335) Financial Statements for the year ended 30 June 2020 Index The reports and statements set out below comprise the financial statements presented to the provincial legislature: Page Accounting Officer's Responsibilities and Approval 5 Audit Committee Report 6 - 8 Report of the Auditor General 9 Accounting Officer's Report 10 - 11 Statement of Financial Position 12 Statement of Financial Performance 13 Statement of Changes in Net Assets 14 Cash Flow Statement 15 Statements of Comparison of Budget and Actual Amounts 16 - 22 Accounting Policies 23 - 59 Notes to the Financial Statements 60 - 99 3 MARULENG LOCAL MUNICIPALITY (Registration number LIM 335) Financial Statements for the year ended 30 June 2020 Index ASB Accounting Standards Board Acc pol Accounting policies AFS Annual financial statements AGSA Auditor General of South Africa GRAP Generally Recognised Accounting Practice Budget St Statement of comparison of budget and actual information PPE Property, plant and equipment UIF Unemployment insurance fund SALGA South African Local Government Association EPWP Expanded Public Works Programme CFS Cash flow statement PAYE Pay As You Earn VAT Value Added Tax MEC Member of the Executive Council MFMA Municipal Finance Management Act MIG Municipal Infrastructure Grant (Previously CMIP) MSCOA Municipal standard chart of accounts SFPOS Statement of financial position SFPER Statement of financial performance 4 MARULENG LOCAL MUNICIPALITY (Registration number LIM 335) Financial Statements for the year ended 30 June 2020 Accounting Officer's Responsibilities and Approval The accounting officer is required by the Municipal Finance Management Act (Act 56 of 2003), to maintain adequate accounting records and is responsible for the content and integrity of the financial statements and related financial information included in this report. It is the responsibility of the accounting officer to ensure that the financial statements fairly present the state of affairs of the municipality as at the end of the reporting period and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the financial statements and was given unrestricted access to all financial records and related data. The financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. The financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The accounting officer acknowledges that he is ultimately responsible for the system of internal financial control established by the municipality and place considerable importance on maintaining a strong control environment. To enable the accounting officer to meet these responsibilities, the accounting officer sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the municipality and all employees are required to maintain the highest ethical standards in ensuring the municipality’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the municipality is on identifying, assessing, managing and monitoring all known forms of risk across the municipality. While operating risk cannot be fully eliminated, the municipality endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The accounting officer is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit. The accounting officer has reviewed the municipality’s cash flow forecast for the year to 30 June 2021 and, in the light of this review and the current financial position, he is satisfied that the municipality has or has access to adequate resources to continue in operational existence for the foreseeable future. The municipality is wholly dependent on the municipality for continued funding of operations. The financial statements are prepared on the basis that the municipality is a going concern and that the municipality has neither the intention nor the need to liquidate or curtail materially the scale of the municipality. Although the accounting officer are primarily responsible for the financial affairs of the municipality, they are supported by the municipality's external auditors. The external auditors are responsible for independently reviewing and reporting on the municipality's financial statements. The financial statements have been examined by the municipality's external auditors and their report is presented on page 9. The financial statements set out on pages 10 to 99, which have been prepared on the going concern basis, were approved by the accounting officer on 31 October 2020 and were signed on its behalf by: Mr TG Magabane ACCOUNTING OFFICER - Municipal Manager 5 MARULENG LOCAL MUNICIPALITY (Registration number LIM 335) Financial Statements for the year ended 30 June 2020 Audit Committee Report 6 MARULENG LOCAL MUNICIPALITY (Registration number LIM 335) Financial Statements for the year ended 30 June 2020 Audit Committee Report 7 MARULENG LOCAL MUNICIPALITY (Registration number LIM 335) Financial Statements for the year ended 30 June 2020 Audit Committee Report 8 Report of the Auditor General To the Provincial Legislature of MARULENG LOCAL MUNICIPALITY Audited by: Auditor-General of SA (AGSA) 28 February 2021 9